No Match Found
PwC's latest research reveals that PE firms are increasingly recognising the value of incorporating environmental, social and governance (ESG) factors into their investment strategies and decision-making processes. Compared to ten years ago, the vision of PE companies has clearly evolved. They are no longer solely focused on risk management, but have also recognised the opportunities to integrate and quantify ESG throughout the deal lifecycle. This includes financial ups and downs, ESG taxes and subsidies, strategy, resilience and operational efficiency.
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PERIS provides insight into how 166 private equity firms in 22 countries view ESG. Five key findings from the recent report are:
'The Dutch trends are not fundamentally different from the global trends', Cornelis Smaal reflects on the research. 'You can see that ESG is being looked at explicitly in the Netherlands, while at the same time the investors (the limited partners) are often active worldwide and therefore invest widely, across national borders.
However, we are still missing opportunities; ESG and, by extension, reporting on it (such as SFDR and CSRD) is often still seen as compliance and not as an opportunity to make a substantial contribution. The zeitgeist is different from ten or even five years ago. ESG, thinking in terms of value (also financially) and 'doing the right thing' require a different approach.'
'As an organization you should indeed not look at sustainability because it is or will become mandatory, but as a must to run your business even better,' adds Leonie Schreve. 'Whereas a compliance approach is mainly based on ticking the box, we look much more at market dynamics and opportunities. We show our clients that sustainability offers financial value to differentiate yourself from competitors, open up new markets and attract financing more easily. This requires a 360-degree approach to properly understand the company and the market and to help it understand the opportunities for value creation.'
Within private equity funds there are still plenty of opportunities to manage even better on value. 'With the right mindset, tooling and commitment from all those involved, you can capitalise on those opportunities', concludes Smaal. 'And you will have to, because if you are not already thinking more broadly about ESG and value - in your current fund and investments - you will not be sufficiently involved in subsequent fundraising events. Times have really changed.'
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